The North Dakota Attorney General issied a Cease and Desist against FHTM recently. This is never good news for a business, and can often lead to additional scrutiny and sometimes similar actions in other states.
BISMARCK – Attorney General Wayne Stenehjem has issued a Cease & Desist Order against Fortune Hi-Tech Marketing of Lexington, KY and its principals Paul C. Oberson, Jeff Oberson, and Thomas A. Mills for violations of North Dakota transient merchant, consumer fraud, and home solicitation sales laws. The Order was filed late yesterday, December 10, 2009.
According to Stenehjem Fortune Hi-Tech continued its business activities in North Dakota even after being told it could not do so without the required Transient Merchant license. “This business blatantly disregarded our effort to ensure compliance with North Dakota law,” Stenehjem said. “This is not the typical response from a legitimate company and its actions must have consequences.”
The Consumer Protection Division is reviewing Fortune Hi-Tech’s activities and it appears there also may be violations of the consumer fraud and home solicitation sales laws. “I’m concerned about this assortment of violations,” said Stenehjem. Stenehjem has requested information about the extent of the company’s business transactions in North Dakota including dates of transactions, customers, and payments received.
In addition to these violations, Stenehjem asked the Consumer Protection Division to review whether this company is engaged in any violations of North Dakota’s pyramid law. North Dakota law prohibits promotional pyramid schemes in which the participant pays for the opportunity to receive income primarily from the recruitment of other participants rather than the sale of goods or services.
An Attorney General action in any state is usually a huge negative. Years ago, TravelMax International in California got whacked with an injunction by the Kentucky Attorney General, and that was the end of the company. No one had any confidence and everyone bailed out. The company closed within a few months.
That was before the Internet made finding info about a company like FHTM, is that when someone looks for an FHTM review, they are going to find info all over the internet on everything from FHTM SCAM to info on the FHTM Attorney General action whenever they do a search.
The most important thing the company can do is to try to resolve the situation and get an article or information posted that exonerates them, something legitimate, not just the usual corporate spin that comes out of companies when this kind of thing happens.
Whistleblower fights back
after frivolous suit by FHTM for exposing their ILLEGAL Pyramid Scheme
Lexington, Kentucky - June 16,
2010 - In light of all of the recent investments scams including the infamous
Bernie Maddoff, whistleblowers and those with morals fear that the frauds they
expose will result in unjust lawsuits filed against them by the companies they
complain about. One such situation was that of the lawsuit filed by Fortune
Hi-Tech Marketing against Fortune Social LLC and Joseph Isaacs in May 2010.
Joseph Isaacs and Fortune Social, LLC (collectively
“Isaacs”) deny each and every claim brought by Fortune Hi-Tech Marketing, Inc.
(“FHTM”) in a filing made today with the American Arbitration Association, who
is overseeing this case. In addition, Isaacs fights back and asserts his own
counterclaim for relief against FHTM, Paul C. Orberson (individually and in his
capacity as President of FHTM), Jeff Orberson (individually and in his capacity
as Chief Operating Officer of FHTM), and Thomas A. Mills (individually and in
his capacity as Vice-President and Chief Executive Officer of FHTM)
(collectively “FHTM”). Isaacs counterclaim claim Breach of Fiduciary Duty,
Breach of Contract, Common Law Fraud, Unfair & Deceptive Business
Practices, Failure to Register Securities, Fraudulent Practices Regarding the
Sale of Securities, Civil Racketeering Conspiracy (violation of the Federal
RICO statutes) and Defamation.
FHTM operates an unlawful product-based endless recruiting
pyramid scheme that relies on untrue and misleading representations and
unlawful, unfair, and fraudulent business practices. While FHTM purports to be
in the business of selling name-brand services like wireless, satellite
television, home security, vitamins, nutritional products and travel services,
its true business is using consumers to generate fee income for representing
non-existent partnerships, major sports figures, and prominent businessmen. To
entice consumers to participate, FHTM makes untrue or misleading claims
regarding its relationship with Fortune 100 companies like Verizon Wireless, GE
Security, Dish Networks and Travelocity to create the illusion that consumers
can become millionaires in three to five years.
FHTM’s growth exploded when it
began to lure consumers disenchanted with traditional jobs and the recession
that began in 2007 to inspirational and high-pressure business opportunity seminars
touting an innovative business model that promises huge financial rewards
through multi-level network marketing. FHTM erring presenters claim to have
proprietary tools, special relationships, and other support that allow
consumers to grow their own business by partnering with FHTM’s “companies”.
It would not be long before Isaacs (and the world) made
several troubling discoveries about FHTM’s business plan and practices that
doused his enthusiasm: (1) Paul Orberson had not made any special
arrangements with the companies mentioned at the business
opportunity/presentation seminar or in the company produced videos; (2) the only
way to earn a significant income and be promoted up the ranks was to recruit
additional IRs; (3) FHTM had not received regulatory approval for its
pyramiding scheme in every state; (4) only a handful of IRs had earned
anywhere near the residuals projected; (5) the prominent businessmen,
politicians, former attorney generals and sports figures to whom FHTM
constantly alluded were in fact IRs actively promoting their own FHTM
business; and (6) a growing number of state attorneys general had already
begun investigating FHTM in response to numerous complaints.
It turns out that FHTM’s ‘innovative’ marketing plan is
nothing more than a face lift to an age-old scheme. According to the FTC’s
Consumer Protection Bureau:
Pyramid schemes now
come in so many forms that they may be difficult to recognize immediately.
However, they all share one overriding characteristic. They promise consumers
or investors large profits based primarily on recruiting others to join their
program, not based on profits from any real investment or real sale of goods to
the public. Some schemes may purport to sell a product, but they often simply
use the product to hide their pyramid structure. There are two tell-tale signs
that a product is simply being used to disguise a pyramid scheme: inventory
loading and a lack of retail sales. Inventory loading occurs when a company's
incentive program forces recruits to buy more products than they could ever
sell, often at inflated prices. If this occurs throughout the company's
distribution system, the people at the top of the pyramid reap substantial
profits, even though little or no product moves to market. The people at the
bottom make excessive payments for inventory that simply accumulates in their
basements. A lack of retail sales is also a red flag that a pyramid exists.
Many pyramid schemes will claim that their product is selling like hot cakes.
However, on closer examination, the sales occur only between people inside
the pyramid structure or to new recruits joining the structure, not to
consumers out in the general public.
Nonetheless, the truth is
catching up with FHTM. On December 10, 2009, The North Dakota Attorney General's Office filed a Cease and Desist
Order for violation of the Consumer Fraud Law, the Transient Merchant Law, the
Home Solicitation Sales Law, and the North Dakota Pyramid Schemes Act. On
January 19, 2010, FHTM entered into a Assurance of Voluntary Compliance with
the North Dakota Attorney General's Office. On March 16, 2010, the Montana State Auditor's Office filed a
Temporary Cease and Desist Order against FHTM, Paul C. Orberson, Thomas A.
Mills, and Dianne Graber (a Montana IR). According to the Montana State
Auditor's Office, FHTM has engaged in acts or practices constituting violations
of the Securities Act of Montana, Montana Code ANN.30-10-101 et seq. On April
22, 2010, FHTM agreed to pay nearly $1 million and to change its
business practices to resolve the charge that it is operating a pyramid
With each passing day, more
states are jumping on FHTM’s bandwagon. The alarming rise in consumer
complaints and governmental sanctions has prompted the Better Business Bureau
of Central and Eastern Kentucky to downgrade FHTM’s rating from “B-” to “F”. At
the same time, a proliferation of online bulletin boards and blogs, such as www.complaintsboard.com and www.scams.com criticize FHTM’s pyramid scheme
confirms that Isaacs’ experience is not unique. Will those operations be the
next target of Fortune’s high price legal team?
We are pleased to be able to tell you that we have resolved our issues with the Attorney General of North Dakota. We had very positive discussions with his office, and were very impressed with their willingness to listen to us and to work with us.
As part of our agreement with them, we must remind you that it is a misrepresentation pursuant to North Dakota law (and the laws of all 50 states and territories) to tell any person that income can be earned solely by recruiting new independent representatives. All earnings are dependent on the sales of products and services, as required by law.
Further, our agreement does not constitute an endorsement or an approval of FHTM, our business model, our products or our services.
You may now resume your business in North Dakota. Please be mindful of the above, and know that we have full confidence in you and your ability to bring honor to the FHTM name.